Problem 1:

In the economics of the firm, we are spending a lot of time on thinking about the firm's internal structure right now. A problem in firms and teams in general is the Free-rider problem. In your own workplace have you experienced a free-rider problem? Are there mechanisms for reducing this behavior?

Problem 2:

Consider some of hierarchical models of firm: U-form, M-form, Network and Matrix. Can you think of some instances of these? In your instances, are these efficient or unproductive organizational structures? What do these systems imply about the efficient level of hierarchy within each of them?

Think about your current or past organization where you were employed. What was its structural form and levels of hierarchy? Was it proficient? What was the incentive structure which was designed for it? How could that incentive system been modified to enhance the efficiency?

Problem 3:

All firms outsource some activities. When does it seem sensible to outsource, i.e. purchase goods and services needed by the firm from other companies. For illustration, why do auto makers buy tires from other firms before making them themselves?

Problem 4:

What role do transaction costs play in the determining the efficiency of internal structure of a firm (U-form, M-form, Matrix, Network)? There are many transactions that take place in the firm that don't take account of prices like regular markets do. Nevertheless, there are opportunity costs to interactions in the firm. For ex, if a department wants the accounting department to do a study or if the IT department is asked to execute a task for another department, there’re opportunity costs. In that context, what role do transaction costs play in determining the effectiveness of internal structure of a firm (U-form, M-form, Matrix, Network)?

Additional Requirements:

Other Requirements: For each problem 160-200 words